Shares of Advanced Micro Devices (AMD) fell sharply in premarket trading on Wednesday after the chipmaker’s latest revenue forecast failed to fully satisfy investors, despite projecting continued growth driven by artificial intelligence (AI).
AMD’s stock dropped 8.8% in premarket trading to $473, putting more than $74 billion of the company’s market value at risk. The decline came as investors looked for stronger evidence that the global AI investment boom would translate into even faster revenue growth.
Adding to the pressure, SpaceX announced it would build its computing infrastructure exclusively using Nvidia chips, dealing a setback to AMD’s efforts to expand its presence in the rapidly growing AI hardware market.
SpaceX Chief Executive Elon Musk praised Nvidia’s Vera Rubin platform, calling it “the best architecture,” helping Nvidia shares rise 1.9% in premarket trading.
Despite the market reaction, AMD projected third-quarter revenue of approximately $13 billion, with a possible variation of $300 million. The forecast exceeded analysts’ average estimate of $12.52 billion, according to data compiled by LSEG.
However, analysts said investor expectations had risen significantly following strong results from rival chipmakers and recent optimism surrounding AI-related demand.
Bernstein analyst Stacy Rasgon said investors had become increasingly bullish after Intel’s recent earnings, leaving AMD with an exceptionally high benchmark to satisfy.
Analysts at TD Cowen echoed that view, describing AMD’s earnings and guidance as “objectively good” but noting that the company faced a “very high bar” after its recent share price rally and major AI partnership announcements.
Last month, AMD signed strategic agreements with Anthropic and Core Scientific to strengthen its artificial intelligence infrastructure business, reinforcing its ambition to become a leading supplier of AI computing solutions.
AMD shares have more than doubled this year as investors increasingly view the company as the strongest alternative to Nvidia in the AI chip market, intensifying scrutiny of every quarterly earnings report.
Chief Executive Officer Lisa Su said AMD expects its data center revenue to more than double by 2027 and projected total company revenue growth to exceed its previous target of more than 35%.
The company also reported strong performance in its data center division, where revenue more than doubled to $6.72 billion, surpassing Wall Street expectations and highlighting continued demand for AI-focused processors.
Although AMD continues to benefit from the rapid expansion of artificial intelligence, analysts say investors now expect consistently exceptional growth as competition with Nvidia and Intel intensifies in the global semiconductor industry.
